situp.py originally started out as an attempt to write a simplified CouchApp “client” that followed and reused the python distutils package, the idea being that distutils would take care of lots of the heavy lifting (and provide a few features “out of the box”). After a bit of tinkering it became fairly apparent that a lot of code would be necessary to override distutils behaviour. So now situp.py is just another CouchApp client (and an excuse to experiment with a few things).
A key feature of situp.py is that it’s only dependency is python - this makes it easy to use in automated test/install situations. If you don’t want to use minification it’s a single file.
My colleague Mike can probably tell you better than I! In short a couchapp is an application that serves and is served from Apache CouchDB.